Michael McBryde of Stephens, Inc. presented the Helena-West Helena City Council with a money-saving proposal. McBryde suggested the city entertain the possibility of refinancing the sales and use tax bond issue in hopes of receiving an influx of cash.
“This is an opportunity for the city to perhaps generate a little interest savings,” explained McBryde.
According to Mayor Arnell Willis, Stephens Inc. has a long-standing business relationship with Helena-West Helena and the city has a solid business acquaintanceship with McBryde.
“Based on the current market conditions, the City of Helena-West Helena could potentially achieve a substantial amount of savings by refunding the bond issue of August 2007,” reported McBryde.
McBryde presented a schedule that showed the current repayment terms and the potential savings the city could receive by refunding the bond issue.
“This was a bond that was used to purchase the lease of the landfill, which is supported by the city's 2 percent sales tax,” stated McBryde.
In a nutshell, McBryde reported that the bond issue original balance showed $9,060,000 and the amount of outstanding debt right now reflects $9,495,000 with the average interest of 4.95 percent.
”What we're talking about now is issuing another bond issue to pay off this bond issue with the same maturity length with a lower interest rate,” explained McBryde.
McBryde went on to say that the schedule is structured where the city will begin to see the savings within the next 3 years, which will allow more flexibility with the funds.
“This is not an extension on your term and you will be issuing less debt and your interest rate will be reduced reflecting 1.6 percent in interest savings,” said McBryde.
McBryde added that the schedule is determined by the new present value that takes into the consideration inflation, time value and money.
The council agreed to approve the resolution as a step to allow them to move forward to explore the possibility of refinancing the bond debt.